Making the system work

March 27, 1986

THE United States Senate decided this week -- in defeating the budget-balancing constitutional amendment -- that the fault for federal deficits lies more with the budgetmakers than with the system. Or at least that the Gramm-Rudman-Hollings legislation, which calls for across-the-board cuts if Congress fails to reach a $144 billion deficit target for fiscal 1987, is experimentation enough for the moment. The Senate is right on either count.

It is better not to change a system when the basic problem is a political unwillingness to make the existing system work. At another time, a president may lead more by consensus, or have the support of both houses of Congress.

In this case the White House, because of the executive style of this administration, chooses to lead by confrontation. In 1981, when the spending target was less than $700 billion, Mr. Reagan successfully steamrollered Congress into passing the budget. Republicans stuck together on those votes, and with the help of willing conservative Democrats the President had his way. Now, with a $1.1 trillion budget in prospect, the lead role has fallen to Senate Republicans. The Senate Budget Committee has passed, with bipartisan support, a commendable budget for next year, which would spend some 28 percent on defense, 21 percent on social security, and 14 percent for interest payments. After the Easter recess, the full Senate will vote on it.

The House is letting the Senate take the lead. This is because the Senate has included a tax increase to help bring the deficit down to the $144 billion target. The House measure is about $10 billion off; it needs a tax hike to make up the shortfall. But with the President unwilling to consider revenue increases, the House wants the Senate to go first. With taxes, the Senate and House measures might not be far apart, and there could be congressional agreement this spring.

The White House is staying out of the game. A budget resolution does not require a presidential signature. The President can still veto reconciliation bills, tax increases, and individual appropriations. In August, Gramm-Rudman requires a ``snapshot'' of the deficit for fiscal 1987, which begins in October. (There is, by the way, a $10 billion leeway -- that is, an effective $154 billion threshold -- before the automatic cuts are triggered, and a further slow-growth safeguard.) This is the crunch point under Gramm-Rudman. If the Supreme Court voids the provision for the General Accounting Office to assess the cuts, Congress would have to vote them directly. Otherwise, Gramm-Rudman falls apart. The White House would be able to blame Congress for failure to abide by its own deficit-reduction process. And the federal government would be operating again, as it has in recent years, under ``continuing resolutions'' -- which describes the psychological as well as practical governing setup in Washington.

Congress is a bit less anxious over the deficit. For various reasons, the '87 outlook is somewhat better -- from more than $200 billion to the current $183 billion estimate. And in significant ways, the system is working. A Democratic-Republican consensus emerged rather quickly in the Senate Budget Committee. Congress, expecting no help from the White House, is moving ahead.

In a continental country, with such competing regional, industrial, commercial, and social constituencies, allocating $1.1 trillion is no easy matter. Unlike states, a federal government runs deficits at times to spur growth. The Federal Reserve helps control the speed of the economy with interest-rate and other monetary moves. The White House has an administrative role under federal labor, pension, and other benefit-related laws.

A balanced-budget amendment offers no easy path through these responsibilities. The Senate has rightly recognized this and is proceeding as forthrightly as it can to deal with the system and the players as they exist today.